Doug Beghtel/The Oregonian A creditor has taken control of some of the vacant land surrounding the stalled Round at Beaverton Central, placing the project's ownership in flux leading up to a related auction scheduled for February. BEAVERTON -- Vacant land key to completing the long-stalled Round at Beaverton Central is in ownership flux as a stiffed creditor has taken control of the property but another lender could trump that during an auction scheduled for February.

Four parcels that went undeveloped by Dorn-Platz Properties Inc. are now owned by a subsidiary of Fortress Investment Group LLC, a key lender of the infamous project. Although Dorn-Platz's exit had been expected -- and even welcomed -- the foreclosure sale may leave city leaders without a willing developer for a public-private project that is only half finished after more than a dozen years.

View full sizeMeanwhile, the priority creditor, Dove Street Capital Lenders LLC, is still owed more than $2.15 million from the project. A land auction to pay Dove Street is tentatively set for Feb. 16 at 11 a.m. in the lobby of the Washington County court house.

"It remains to be seen who will become the property owner," said Doug Cushing, the local attorney representing Fortress, a New York hedge fund.

Whatever company ends up controlling the land is subject to the development agreement that Beaverton reached with Dorn-Platz, city attorney Alan Rappleyea said. That agreement called for completion of three more buildings and a parking garage by 2009.

This marks the second time that Beaverton's chosen developer has failed to make good on the mixed-use project, which features ground-level retail, office space and condominiums centered around light rail.

In 1997, Portland developers Selwyn Bingham and Sylvia Cleaver launched the project but lacked funding, sending the development to bankruptcy court and back to the city at a price of $1.9 million. Enter California-based Dorn-Platz, which struggled to find financing but eventually bought the land from Beaverton in 2002.

Construction restarted but problems followed nearly every step of the way.

Beaverton Round residents sue over payments

The condominium association at the Round at Beaverton Central is suing the former developer for more than $280,000 in monthly expenses that allegedly went unpaid.

Lofts at the Round Condominium Association says in a December complaint that monthly expenses for 13 condos owned by the developer have gone unpaid for an unstated length of time.

The condos are owned by DPP Beaverton Condominiums LLC, a subsidiary of Dorn-Platz Properties Inc. The development features 65 condos in full.

The condominium association last year settled a lawsuit alleging poor craftsmanship. Half of the building is now covered in tarps as construction crews make repairs. The improvements should be finished sometime this year, said Phillip Joseph, the attorney who represented the group in that lawsuit.

--Brad Schmidt

By 2005, Beach Metro-Oregon LLC and Nebraska Partners purchased the Coldwell Banker building from Dorn-Platz. Two years later and behind on the development schedule, Dorn-Platz transferred ownership of the three remaining buildings to DB Beaverton LLC, a Fortress company, through a foreclosure settlement.

Dorn-Platz promised city leaders it would still develop the remaining parcels. That didn't happen.

By October 2009, various construction liens on the vacant land were settled for $300,000, according to court documents. In November, Fortress' Beaverton Land Parcels LLC purchased the lots for $400,000.

Fortress and Dove Street are having discussions about the vacant property, Cushing said. Fortress previously tried to unload completed buildings and still plans to sell them, when the time is right, Cushing said. Asked whether Fortress has any desire to develop the vacant land, Cushing said the company's goal is to "maximize their return however that best plays out."

"If we own all the parcels, that probably makes it easier for us," he said. "But it all depends on, what does Dove Street do?"

Attorneys and representatives for Dove Street and Dorn-Platz did not respond to interview requests or would not comment.

Beaverton officials are waiting to find out which company ends up with the land, estimated to be worth more than $1.7 million, according to a recent appraisal for the city.

"We don't know what they're going to do and we haven't talked to them about that," said Gary Brentano, the city's business development services director. "There simply isn't any reason to have that conversation at this point in time, absent a viable strategy moving forward for the city to engage and facilitate some type of development opportunity."

Beaverton officials plan to ride out the dismal economy, eventually find a new development partner and perhaps renegotiate the construction agreement.

For now, there's talk of spending money for improvements to the Round. Brentano said the city is considering work to the southern portion of the plaza and possible enhancements to the nearby creek.

"The only thing we can do," Brentano said, "is otherwise demonstrate a commitment to the completion of the project."